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“I am now convinced that the simplest approach will prove to be the most effective – the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Martin Luther King, 1967

It may come as a surprise to learn that the current ‘hot topic’ of universal basic income (UBI) – also known as basic income or income guarantee – is actually over 500 years old.

It was first developed by radicals such as philosopher Sir Thomas More in the 16th century, drawing upon humanist philosophy. It was mooted by Thomas Paine in the 18th century, and then again in the mid-20th century, by economists such as James Tobin and Milton Friedman. In 1967, Martin Luther King called for a ‘guaranteed income’ to abolish poverty, and in the 1970s, a basic income experiment ‘Mincome’ was conducted in Canada.

However, only in recent years has debate on universal basic income (UBI) moved into the mainstream.

From the threat of job losses from automation and artificial intelligence, an overly complex and bureaucratic welfare system that has been branded ‘unfit for purpose’, to the failure of conventional means to successfully tackle unemployment over the last decade – basic income has been hailed as a key way to reduce inequality and provide a basic level of financial security upon which individuals can build their lives.

It has many current supporters – including billionaires Elon Musk, Mark Zuckerberg, and Richard Branson. There is support among the general public too, with a recent poll reporting that nearly half of all adults aged 18-75 in the UK (49%) would support the UK Government introducing UBI at the level to cover basic needs in principle.

How does it work?

In essence, UBI offers every citizen a regular payment without means testing or requirement for work.

Trials of different models of basic income have been conducted around the globe, including Kenya, Finland, and Canada. There are also UBI trials planned in the district of Besós in Barcelona, Utrecht in the Netherlands and the Finnish city of Helsinki. Closer to home, four areas in Scotland are also currently designing basic income pilots – Glasgow, Edinburgh, Fife and North Ayrshire.

While there have been many different models of basic income trialled and assessed over the years, in general, basic income schemes share five key characteristics:

Periodic: it is paid at regular intervals, not as a one-off grant.

Cash payment: it is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not paid in kind (such as food or services) or in vouchers with a specific use

Individual: it is paid on an individual basis—and not, for instance, to households.

Universal: it is paid to all, without means test

Unconditional: it is paid without a requirement to work or to demonstrate willingness-to-work

Anticipated benefits

The key anticipated benefits of the introduction of UBI is a reduction in inequality and poverty. However, advocates claim that it would also have many other benefits. These include:

simplifying the existing welfare system (including efficiency gains)

reducing the psychological burden and stigma associated with welfare benefits

achieving more comprehensive coverage – no one ‘slipping through the net’

addressing predicted future mass unemployment as a result of automation

Criticism

The key argument against the introduction of UBI is its cost – essentially that “an affordable UBI would be inadequate, and an adequate UBI would be unaffordable”.

Critics argue that if UBI were set at a level that enabled a modest, but decent standard of living on its own, then it would be unaffordable – either requiring much higher taxes, and/or the redistribution of funds from other areas, such as education or health.

However, if UBI was set too low, it would not provide an adequate income to live on, and it may be exploited as a subsidy for low wages by unscrupulous employers.

Others, such as economist John Kay, have argued that UBI simply would not have the redistributive effects intended. Rather than improving the lives of those most in need, who would receive more or less the same as they do under existing welfare systems, it would instead provide more for the middle classes.

There is also some concern that UBI may undermine the incentive to work, and lead to the large-scale withdrawal of women from the labour market.

What does the evidence say?

Certainly, there is a beauty in the simplicity of UBI – and no one can argue against the goals of reducing inequality and poverty. However, in truth, there just isn’t enough evidence available yet to judge whether or not the full-scale introduction of UBI would be successful.

While many pilots have demonstrated positive results, most have been of limited size and scope, and it is difficult to extrapolate these findings to the wider population.

“The unavoidable reality is that such schemes either have unacceptable distributional consequences or they simply cost too much. The alternative – to retain the existing structure of means-tested benefits – ensures a more favourable compromise between the goals of meeting need and controlling cost, but does so at the cost of administrative complexity and adverse work incentive effects.”

Similarly, the IMF conclude that in the UK and France, UBI would be inferior to existing systems in targeting poverty and inequality. However, there are some aspects of UBI that are difficult to model, such as the behavioural impacts of having economic security. Trials and experimentation are important sources of such information.

Thus, the planned trials of UBI in Scotland and elsewhere may well help to provide further answers. And we – along with others around the world – will be watching with interest.

“It might turn out not to be the answer, it might turn out not to be feasible. But as work and employment changes as rapidly as it is doing, I think it’s really important that we are prepared to be open-minded about the different ways that we can support individuals to participate fully in the new economy.”

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Described by supporters as having revolutionised the way the social care system in England is organised, personal budgets have developed to become the norm in social care commissioning in England.

One of the ideas underpinning personal budgets is the development of a new relationship between people who use care services and the organisations who provide them. The new approach was designed to move away from previous prescriptive services towards more bespoke, personalised models of care, where service users are directly involved in planning and deciding what care they receive, and how they receive it.

Within the personal budgets model an allocation of money is given to a specific person from their local authority, following an assessment of need. Money is allocated to the individual, who then works with a professional to work out the most appropriate support. The idea is based on the ideas of transparency, empowerment and personalisation of care.

There are 4 options for service delivery which recipients can chose from to best suit their care needs:

Managed council budgets – where councils arrange the care that is needed following an assessment and an agreed set of outcomes to go alongside a pre-agreed care plan;

Individual service funds – marketed as a more flexible option than local authority led management, this allows recipients to select an alternate organisation to manage an individual’s care budget, and deliver the required services;

Direct payments – this option sees the money paid directly into the account of the person in need of support and allows them to buy care services from an agency or to employ their own carer, or a mixture of both;

Mixed package – a combination of any of the options above, where recipients of support may give some of their budgets to a care provider (either a charity or local authority) but may get a portion of the budget paid directly to them so they can pay, for example, for additional carers to visit during the night.

Those in favour of personal budgets point out that the model promotes the personalisation agenda within health and social care in a way that no other policy does. It gives control of spending directly to the person in receipt of the support and has been heralded as a new age for transparency, increasing choice and control, reducing bureaucracy and cutting costs. Personal budgets have also become a key part of the health and social care integration agenda, as well as being highlighted within the recent reform of SEND (special educational needs and disability) care and provision.

Supporters also argue that one of the best and biggest changes between personal budgets and the original direct payment pilots are that personal budgets are designed to produce outcomes, not pay for a service. They are co-produced with the person in receipt of care, as well as professionals from a number of sectors, care providers and family, if appropriate, to ensure that care plans and agreed outcomes are established when the budget is allocated and that the payments achieve those outcomes.

However, studies have shown that there are big variations in service provision, choice can be limited and poor practice and processes can have a big impact on personal budget delivery and effectiveness. There has also been criticism of the high level of support within government for the model, despite the limited number of pilot roll outs and reviews into outcomes.

In 2016 a National Audit Office report was critical of the way that public services have monitored the impact of personalisation through personal budgets, as very little evaluation of their long term benefits and efficacy have been completed. The report stated that the Department of Health needed to “gain a better understanding of the different ways to commission personalised services for users and how these lead to improvements in user outcomes.” It is clear that there is a lack of evidence as monitoring does not allow service providers to understand how personal budgets improve outcomes.

Critics also argue that personal budgets are ineffective and cannot provide suitable care for everyone in need. They argue that there has never been, and never will be adequate funding to implement personal budgets properly. The principle is only effective, they argue, if there is an unlimited supply of both funds to pay for services and service providers delivering high quality service, which under current conditions of austerity there is not. Supporters counter however, that the concept of “self-directed support” is fundamentally a good one, but admit that poor delivery can deter some people.

Conclusion

Personal budgets can empower people in receipt of care, allowing them to take control of how their care is delivered. This recognition that care should be individualised is a big step forward for people who rely on care services on a daily basis.

However, reduced budgets, inconsistent service provision, and a lack of information for recipients has meant that some people have missed out on the benefits of personal budgets. In practice, services are patchy and evidence of actual benefits, in terms of improved outcomes, is lacking due to the limited number of research studies.

In order to fully realise the power of personal budgets for everyone in receipt of care, the provision, implementation and understanding of the model must be improved. Support for people to help them make the most informed decisions about planning their care packages should also be increased.

“Britain’s retiring workers have never had it so good. As well as being among the last workers to benefit from generous final salary pensions, many older people have housing wealth, having got on to the property ladder long before the boom that has priced out many younger buyers. And thanks to new pension freedoms, which came into force in April, the over-55s can now withdraw money from their pension funds.”

If anything, this article from The Guardian was a little too upbeat – there was no mention of the tens of thousands of older people enduring fuel poverty.

But the story does highlight the growing market which older consumers represent for products and services.

The demographic trends

In many developed countries, ageing populations are being driven by two demographic trends: a declining birth rate due to women having fewer children than in previous generations; and increasing numbers of people living longer, thanks to improvements in diet and medicine.

The global population aged 60 or over is projected to more than triple by 2050, reaching approximately 2 billion people. In the UK, the number of people aged 65 and over is expected to increase from 10.3 million in 2010 to 16.9 million by 2035.

Harnessing the economic opportunities from an ageing population

Surveys of household income and expenditure have reported that older people devote a greater proportion of their total expenditure to necessities, such as food and drink, housing, fuel and power. Luxury items related to recreation and culture are also areas of significant expenditure for older households.

With the abolition of the default retirement age, many older people are continuing to lead productive working lives, and have financial security. The STUC recently published a report highlighting the potential economic contribution of women over 50 to the economy, although noting that they are often ignored in labour market and economic policy.

In 2011, a report for the Centre for Local Economic Strategies (CLES) suggested that harnessing the spend of older people will be increasingly important for both the private and public sectors.

The research pointed to ways in which an ageing society might affect the economy:

Changes in housing needs may provide opportunities for developers and the construction industry to explore new types of housing provision to support older people.

Retired people, such as former business managers, may be interested in setting up their own business, or investing in local enterprises.

More retired people may become interested in playing a wider role in the community through voluntary work, something that may become even more important as public services are cut back.

Older people will also be increasingly important to the labour market, and there are opportunities to explore how their experience and skills can be best used.

Earlier this year, a report from the International Longevity Centre-UK also highlighted the importance of design and technology in responding to the needs of older people, and outlined what needs to happen in order for new technologies to live up to their full potential. Among the recommendations:

Tackling digital exclusion to ensure older people maximise the benefits of new technology.

Providing more evidence on what works to help designers, marketers and retailers understand the potential economic return of targeting older consumers.

The report provided some examples of innovative technologies that could make a significant difference to the lives of older people, including:

a kettle which monitors blood pressure;

lights which adapt to the level of daylight in a room;

driverless cars;

a secure platform enabling the management of bank accounts, bills and pensions through one simple portal.

The ageing population presents challenges for government, business and society in general. However, growth in this section of the population also brings with it emerging economic opportunities. That’s something worth remembering on this International Day of Older Persons.

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